Taxation of individuals in Cyprus
1. Cyprus tax residency
An individual is considered to be a Cyprus tax resident provided that he/she stays in Cyprus for more than 183 days per calendar year. See below however for the conditions to become Cyprus tax resident by staying only 60 days in Cyprus.
2. Taxes for salaries
Individuals in Cyprus are subject to the following obligations in relation to their salary and for certain benefits in kind:
a. Income tax.
b. General Health Contributions.
c. Social insurance funds’ contributions.
3. As from the tax year 2026 the Income tax scales are as follows:
Zero to 22.000 0%
22.001-32.000 20%
32.001-42.000 25%
42.001-72.000 30%
72.001 and over 35%
4. Tax incentives for individuals coming from abroad
a. 50% deduction from the salary
Fifty percent of the salary of a natural person, from a first employment exercised in Cyprus is except from income tax, provided
a. the salary is more than 55.000 Euro per year,
b. he/she was non Cyprus tax resident for at least 15 consecutive years immediately before the beginning of the employment and
c. the beginning of first employment in Cyprus is from 1st January 2022 and afterwards.
The deduction is applicable for 17 tax years or until this tax deduction is withdrawn, whichever comes earlier, counting from the year the employment begins.
If the above deduction is claimed, then the deduction in paragraph (b) below cannot be claimed.
(This is the new article 8.23A and the previous article 8.23 is still applicable).
The provision has more details which allowes the tax deduction to be claimed in certain other cases as well.
b. 20% deduction from the salary
Twenty percent of the salary of a natural person or 8.550 Euro whichever is lower, from a first employment exercised in Cyprus is except from income tax, provided that
a. he/she immediately before the beginning of his/her employment in Cyprus was employed for 3 consecutive years by a non-Cyprus tax resident employer outside Cyprus and
b. the first employment in Cyprus begins after 26.7.2022 up to the year 2027.
The deduction applies for 7 tax years beginning as from the tax year which follows the year of employment in Cyprus.
(This is the new article 8.21A and the previous article 8.21 is still applicable).
c. Exception for the overseas employment salary of a Cyprus tax resident
The salary of a Cyprus tax resident employee from employment exercised overseas for a total period in the tax year of more than 90 days, with an employer who is a non- Cyprus tax resident or at a permanent establishment overseas of an employer who is a Cyprus tax resident, is except from Cyprus income tax. The amount of salary exempt is the one that corresponds to the time period overseas.
5. Tax residence under the 60 days rule
When a person does not reside in any other State for one or more periods which in aggregate exceed 183 days within a tax year and he/she is not tax resident of any other State for the same tax year, is considered a Cyprus Tax Resident in the said tax year, provided the following conditions are satisfied:
a. Resides in Cyprus for at least 60 days in the tax year,
b. Exercises any business in Cyprus and/or is employed in Cyprus and/or holds an officer’s position with a Cyprus tax resident person. The business and/or employment and/or office position shall be maintained as at 31st December of the tax year, in other words they shall not be terminated before the end of the tax year) and
c. Maintains a permanent residence in Cyprus which is owned or rented by that person.
6. Tax resident but non-domiciled and exemption for certain types of other income
For persons that are Cyprus tax residents but non- domiciled there are also other tax exemptions in relation to dividends and interest, for 17 tax years. An example of non-domiciled is the case of a person who was born outside Cyprus and obtained domicile of origin from that country and lived all his life outside Cyprus.
Thus an individual who is a tax resident and non- domiciled is exempt from taxes on dividends and interest, for a period of 17 tax years.
7. Tax exemption in relation to gains on disposal of titles
No income tax is payable on gains on disposal of titles such as ordinary shares, bonds and other similar financial instruments.
8. Nil or reduced withholding tax on certain income received from abroad
Cyprus has concluded double tax treaties with around 55 other countries and many provide for low or nil withholding tax on dividends, interest and royalties and pensions received from abroad.
9. Exemption from Capital Gains Tax on disposal of real estate situated overseas
Gains arising from the disposal of property situated overseas is exempt from Cyprus Capital gains tax.
10. Estate duty, wealth tax, gift tax and inheritance tax
There are no such taxes in Cyprus.
11. Low tax on pension from overseas
An individual receiving a pension from an overseas pension fund in relation to services which were provided whilst outside Cyprus, may choose every tax year to be taxed:
a. Either under normal rates taking advantage of the 22.000 tax free amount or
b. By choosing to be exempted on the first 5.000 euro only and be taxed on the remainder at a flat rate of 5% income tax. Under this method the pension is taxed separately and not added to other income.
If there is overseas tax, there is a possibility to set such tax against the Cyprus tax.
12. Benefits in kind
Some usual benefits in kind which are subject to income tax in Cyprus are the following:
. Accomodation.
. Use of company car for private purposes.
13. Social Insurance rates
The Employer has an obligation to register the individual working in Cyprus with the Social Insurance Services as its employee. Both the employer and employee have obligations to pay contributions as stated below:
Employer:
Social Insurance Fund : (currently 8.8%) – Subject to a limit
Redundancy Fund : (currently 1.2%) – Subject to a limit
Human Resources Fund : (currently 0.5%) – Subject to a limit
Cohesion Fund : (currently 2.0%) -Without limit
Employee:
Social Insurance Fund : (currently 8.8%) – Subject to a limit
(The above limit is Euro 68.904 for monthly paid employees for the year 2026).
There are certain exemptions to EU nationals who wish to continue to pay social insurance contributions in their home country. Please request advice for that matter.
Advice shall also be requested for third country nationals.
14. General Health Contributions rates
The following rates are applicable for employees:
Employer – Currently 2.90% subject to the threshold below.
Employee – Currently 2.65% subject to the threshold below.
There is no obligation to pay contributions for income over 180,000 Euro as calculated cumulatively for all types of income.
The rate of the contribution may differ slightly for other types of income.
An individual living in Cyprus is allowed to join the General Health System for medical treatment.
Advice
As the above are not exhaustive, we shall be happy to provide advice and further clarity for your particular circumstances.
Legal Disclaimer
The information included above is not a substitute to professional advice current and continuous on your specific facts and circumstances for laws, regulations, policies and practices that apply in Cyprus or an overseas country. The information provided is not intended to cover in an exhaustive way the points referred or the tax or other laws they are part of.
The laws, regulations, policies and practices in tax matters are subject to continuous amendments and different interpretations. The application and impact of laws can vary widely based on a particular set of facts. The author and his firm do not accept any responsibility and/or liability to any party for any loss, damage or costs howsoever arising, whether directly or indirectly, whether in contract, tort or otherwise from any action or decision taken or not taken as a result of any person relying on or otherwise using the information on this website or arising from any omission from it.
Thank you for your kind attention and I remain at your disposal for any further explanations and information,
Sincerely yours,
Marinos Koullapis
FCCA
20th February, 2026